Shanghai ponders loophole for foreign property investment

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Authorities in Shanghai are considering controlling overseas investment in property by limiting an individual to purchasing one unit per identity document, a newspaper reported yesterday.

The Shanghai Securities News reported that the principle of 'one document, one house' was still under deliberation, but the guideline was viewed as more relaxed than a plan by Beijing to limit foreign nationals and overseas Chinese to owning a single property per person.

If Shanghai implemented the rule, the city could be leaving open a loophole since it might accept more than one type of identity document per person, the newspaper said. For example, a Hong Kong person could present an identity card, passport and home-return permit.

A spokeswoman for the Shanghai Housing and Land Administration said the government was still 'studying' the matter of foreign property ownership.

Last week six government bodies jointly announced rules on the management of foreign investment in property, including measures to allow only foreign nationals who had worked or studied on the mainland for more than one year to buy housing strictly for their own use. The rules also say residents of Hong Kong, Macau and Taiwan can buy housing of a 'certain area' for their own habitation.

But different cities are interpreting the rules in different ways, given the vague wording. The central government has faced opposition from local governments in cracking down on property speculation, which presents opportunities for earning revenue and corruption.

An analyst said Shanghai's possible interpretation could avoid driving foreign capital completely out of the market.

'Although the government has pledged to curb speculation, it doesn't want to scare away normal buyers. Overseas buyers are the main customers for Shanghai's high-end properties,' said Ye Ying, an analyst at Shanghai E-house Property Research Institute.

A Taiwanese home buyer in Shanghai said speculators could find loopholes in the system.

'Clamping down on overseas speculators is right. But whether these new measures will be implemented is the question. Speculators can always take advantage of lax management,' he said.